Can You Sue a Title Loan Company?
Title loans are a simple and quick way to get cash when you are in a bind. A title loan requires you to put up your vehicle title as collateral. This means that if you miss a payment or default on the loan completely, the company can repossess your vehicle.
There may be an instance where something happening with your title loan might need some legal intervention. Is it possible to sue a title loan company? If so, under what circumstances might you be able to do so?
Let’s find out.
Are Title Loans Legal?
First, you might be asking yourself if a title loan is even legal. In several states, they are not legal. This is because title loans can lead to debt cycles. There is also some false advertising involved in some cases.
There are only a handful of states that have legal title loans.
- According to com, those states include Wisconsin, Virginia, Utah, Texas, Tennessee, South Dakota, New Mexico, Nevada, Missouri, Mississippi, Illinois, Idaho, Georgia, Delaware, Arizona, and Alabama. Some other states might also allow title loans if there are loopholes in their laws.
- An example of a loophole comes from California. They have a maximum interest rate for loans up to $2,500, so lenders will just require a minimum loan amount of that number. In South Carolina, there is a minimum loan amount of $600 that allows lenders to avoid the maximum interest rate for lower loans.
The Consumer Federation of America, along with several other organizations, recognizes these loans as over-secured and predatory, which makes them “detrimental to the financial welfare of an individual.”
Do You Need a Lawyer to Dispute Your Title Loan?
If you are trying to dispute your title loan, there has to be a breach of contract.
For example, a borrower might try to contest the lender’s right to repossess their vehicle due to failure to pay. In some situations, there might be the ability to discuss a renegotiation, known as a loan modification. This would need a lawyer.
Some other legal situations that would require a lawyer include loan fraud, financial law violations, and identity theft. It is common to hear about class action lawsuits.
If you have been informed of a lawsuit against a company you are working with for your title loan, you might want to contact a lawyer for some additional information on what you need to do.
Can You Win a Lawsuit?
When it comes to whether or not you can sue the title loan company, the answer is yes. A more important question to ask is will you win the lawsuit. Your ability to win is pretty slim because the contract that you signed is going to be pretty tight.
For example, if you are trying to sue because you feel like you are paying a whole lot of money, well, that is going to get thrown out. You signed your name to that contract.
Title loans are considered to be illegal in most states and can typically only be administered in a shortlist of states that still consider them legal.
Companies might also be able to administer title loans in states where they can find a loophole in the current laws.
If you are wondering whether or not you can sue a title loan company, the answer is yes. You can sue a title loan company, but the chances of winning are pretty low.